Security challenges driving modest African armoured vehicles market

Written by Defence IQ/defenceWeb, Wednesday, 24 June 2015

Africa has been on something of a spending spree in the past few years, upping its stake in the global defence market while addressing urgent security challenges at home. Security threats such as Boko Haram and al Shabaab are driving a modest armoured vehicles market on the continent, according to experts.

Helmoed Heitman, a South Africa-based defence journalist, author and historian, notes: “For South Africa, the loss of the MRAP [Mine-Resistant, Ambush-Protected] and MDV [Mine Detection Vehicle] market has been significant. There have however been positives, including the success of the South African land systems business in other areas – particularly in the stabilisation of state-owned defence conglomerate Denel.”

In 2012, Malaysia signed a $416 million contract for Denel turrets and weapons to be integrated into its own FNSS/Deftech AV-8 8x8 armoured vehicles, manufactured by Deftech of Malaysia. The contract included 69 two-man turrets fitted with a South African GI30 30mm main gun and 54 anti-tank turrets equipped with the GI30 30mm gun and the Denel Dynamics Ingwe anti-tank missile system, along with 216 laser-guided Ingwe missiles and 54 remote-control weapons systems. Riaz Saloojee, the CEO of Denel Group, described the contract as having made the company a global player and generating international interest in state-of-the-art artillery produced locally.

Two years later, Denel acquired Land Systems South Africa (LSSA) from BAE Systems for $79.85 million, affording the opportunity to grow the division to produce more vehicle capacity and further target the international market, particularly in Africa and the Middle East.

“Beyond South Africa, there has also been a new focus for vehicle production in Nigeria and, to a lesser extent, in other African countries,” Heitman adds. “Uganda, for instance, has been moving from simple acquisition to local assembly and beyond.”

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Heitman also highlights the “dumping” of Chinese equipment in Africa. Indeed China is now the third biggest global arms exporter and within Africa, Sudan is one of its main clients. Tanzania, Morocco and Algeria have also become customers in the past five years – as has Namibia and Cameroon in smaller number – all purchasing relatively low-end technology. The Sudanese business in particular has been met with some controversy, given China’s dual role as arms supplier and peace broker. Sudan has also been complicit in transferring equipment to Darfur in breach of a UN embargo, further highlighting the complexities of foreign arms sales in the continent.

Other countries are of course also providing military equipment and at varying levels of restrictions and volume depending on political sensitivities. Russia has long been an important supplier to a range of African states and Ukraine has found business in providing second hand equipment.

Budget and conflict forecasting

African defence budgets have been on the rise in North, East and West Africa owing largely to the deteriorating security situation brought about by civil and political insecurity and terrorism. This includes the rise of Islamic State, Al Qaeda in the Islamic Maghreb (AQUIM) and other terrorist organisations in North Africa, al Shabaab in Somalia and Kenya, and Boko Haram in Nigeria, Niger, Cameroon and Chad.

Islamic State and other radical terrorist organisations are expanding their grip on the region, from Yemen to Libya and destabilisation in North Africa is affecting surrounding countries in terms of migrants, the flow of weapons, training camps, and a number of other issues. In addition, piracy in the Gulf of Guinea is a defence budget driver, and the aftermath of the Arab Spring continues to see poor security situations across North Africa.

However, with the recent fall in oil prices, many defence budgets have dropped, notably from oil and gas producers like Algeria and Angola – the latter cut tens of billions off its national budget while Algeria has eased its defence spending.

Colonel (Rtd) Daniel L. Hampton, associate dean of the Africa Center at Washington D.C.’s National Defense University, also believes the oil issue will have major consequences. “It would not be surprising to see defence spending in places like Angola and Chad taper off due to these decreasing oil revenues. Sudan and South Sudan would also seem likely candidates to see defence spending impacted by decreasing oil prices, but the current instability and tenuous border security environment may well counter this causal relationship.”

Nigeria has in many ways been at the forefront of the African defence market, both in terms of having domestic military requirements and of launching its own manufacturing plants (such as Proforce Ltd). Hampton believes Nigeria may also see a defence spending decrease on the basis of oil prices, as well as from a possible shift in spending priorities for the new Buhari government.

“There will be high expectations for the new government to show immediate improvement in service delivery and infrastructure improvement,” he says. “It will be difficult to increase defence spending in this type environment. Additionally, it is not a lack of defence spending that has contributed to the violence and insecurity associated with Boko Haram. The strengthening of defence institutions and the military and security sector reforms needed to establish rule of law and enhance citizen security in Nigeria can occur through political will and strategic leadership and is not dependent upon increased defence resources.”

The situation in the Lake Chad Basin, in light of these political changes, remains at risk of renewed violence unless President Buhari and the northern governors are able to address many of the underlying challenges that have so far fostered conditions for Boko Haram to gain and maintain support in the country. Nevertheless, core ideologues may then simply move to more fertile ground. That scenario could place a neighbouring country like Cameroon under further pressure, where conditions for an emerging threat – an ageing leader and the chance of political instability – could prove ripe for extremism. Such an occurrence would of course demand a regional or international response depending on the severity of the violence.

“It is reasonable then to expect budgets in the Sahel to rise in response to the rising insecurity there,” adds Heitman. “That’s the entire Sahel region, with a particular eye on the southward spread of conflict into central Africa – such as in the CAR – where there is growing cooperation among guerrilla, terrorist and criminal groups; sharing of local knowledge and contacts, experience and expertise. All of that is not just being caused by rebel and terrorist groups, but also by the growing presence of the international drug cartels.”

Indeed the transatlantic drug trade has been flourishing in recent years, with contraband being smuggled from Latin America to West Africa thanks to its reputation as an ‘easier’ gateway into the European, Asian and Middle Eastern drug markets. The trade has become so prevalent that it has, in some states, been threatening government control over cities and utilities. Naturally, as with maritime piracy and animal poaching, the drug trade has its roots in organised crime, which in turn is now a key source of funding for militant groups.

What it means for armoured vehicles

With few exceptions – namely, the Ethiopian-Eritrean border and the Sudan-South Sudan border – the continued involvement of these insurgent groups, non-state actors and criminal elements will not only influence the threat profile but also the market for land systems. The adversary operates chiefly amongst the populace and within built-up, urban areas. As such, the African armoured vehicles market is under particularly close watch.

Heitman believes that acquisition decisions, in many cases, are erratic but that “generally speaking, I would expect to see an increase in protected patrol vehicles that will survive an ambush, in light armoured vehicles that can overmatch the typical ‘technical’ and in mine-protected, MRAP and mine-detection vehicles in response to the expansion of the IED threat.”

Hampton agrees with this prediction, and while the acquisition of heavy armoured vehicles and self-propelled artillery is rare for African states, he expects requirements for them will be even further diminished.

“Instead, more armoured vehicles with large calibre guns and area fire weapons will be reconfigured with machine guns and precision weaponry,” he says, explaining that this will be driven in part by the strategic importance of reducing collateral damage and civilian casualties.

“The result is a trend towards armoured vehicles and IED resistant personnel carriers that can provide mobility and protection for security forces. The ground vehicle will be a platform for quick reaction, targeted-engagement, ISR, over-watch and medical evacuation more so than ensuring overwhelming combat power. Additionally, the continued growth in African contributions to multinational peace operations and crisis response will drive this shift to a ground vehicle acquisition strategy focused on the mobility of troops and supplies. The defence economics of peacekeeping almost demands that Troop Contributing Countries attain and maintain APC’s and trucks as the priority ground vehicle systems in their inventory if they are to maximize the potential financial return of participation in UN missions.”

Hampton projects a resulting defence industry trend for the continued growth and emergence of small manufacturers that refit and refurbish the more common ground vehicles systems currently extant and prolific on the continent.

Predicted priorities for Africa

According to defence experts, African states will continue to come to the realisation that they need increased strategic capability. At the same time, there is a heightened belief among African governments that they can take a more proactive and sustainable approach to their involvement in the defence market. Now that global industry is looking to Africa as a major source of income, regional states are rightly looking at leveraging their own benefits from the demand.

More and more customers are insisting on local manufacturing, offsets and long-term support for defence equipment. Manufacturers are responding by becoming more involved with their customers. This also extends to joint ventures and partnerships, especially as many countries wish to build up their own defence industries. Denel has partnered with the UAE (Tawazun Dynamics) and Brazil (on the A-Darter), for instance while DCD Protected Mobility is building armoured vehicles in Nigeria.

Hampton notes that conflict and violence in Africa are becoming increasingly difficult to define and categorise. “State-on-state conflicts are rare, civil wars that pit two or more organised armed factions against each other or against government security forces, “ he says. “They are a Twentieth Century legacy. Despite frequent references to insurgencies and insurgent forces, the blurring of lines between armed rebellion and criminal enterprise calls into question the relevancy and efficacy of traditional counter-insurgency (COIN) doctrine. In other words, effective COIN strategies in Africa must cross-cut the entire security sector, identifying, balancing and prioritising the roles of the police, judicial, military and intelligence services.”

Heitman reasserts the belief that protected patrol vehicles, armoured cars and possibly some air-transportable vehicles will continue to be in demand while African states will inevitably look at smarter ways of doing business.

“Denel and Paramount and other South African companies will seek to expand their market in Africa,” predicts Heitman. “Other African countries will begin to insist on offsets in technical and defence fields, and on growing levels of local assembly and even moving into manufacture. Meanwhile, African armies are building operational experience, and Africa’s people are increasingly impatient with incompetence, corruption and nepotism in government. Together those trends will see acquisitions being more professionally handled, with less room for poor quality equipment, for contracts that do not include support, and for irregular contracting.”

These and other topics will be discussed at the Armoured Vehicles Africa conference to be held by Defence IQ in Botswana between 25 and 26 August.